Dollar Pullback: Trade Issues Keep the Greenback in Check
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The dollar paused its rally on Thursday after a strong rebound, spurred by President Donald Trump retracting his threats to remove Federal Reserve Chair Jerome Powell and signaling a potential shift toward a less aggressive stance on China tariffs.
Having dipped below 140 yen earlier in the week, the dollar bounced back from key chart support levels and was last seen at 143.25 yen. The dollar gained further momentum when Treasury Secretary Scott Bessent stated that the U.S. did not have a specific currency target, ahead of discussions with Japan’s finance minister.
Bessent also noted that the current de facto embargo on U.S.-China trade was unsustainable, although he clarified that the U.S. wouldn’t lead the charge in reducing tariffs on Chinese goods.
The dollar has recovered from a three-and-a-half-year low of $1.1572 per euro but experienced some selling pressure during the Asian trading session, stabilizing around $1.1338. ING currency strategist Francesco Pesole remarked that the dollar remains highly responsive to trade news, but the risk for further downside remains in the near term, even though a continuation of recent dollar selling is unlikely.
The euro-dollar exchange rate largely depends on the strength of the U.S. dollar, with a further climb above $1.15 possible if concerns about the Fed’s independence resurface.
The Australian and New Zealand dollars also slipped from their recent highs. The Aussie, which briefly broke above $0.64 earlier this week, was at $0.6361, with potential resistance around its 50-day moving average at $0.6286 amid concerns about global economic growth. The New Zealand dollar remained steady at $0.5949.
The British pound and Swiss franc steadied after a sharp retreat, with the pound holding at $1.3263 and the Swiss franc at 0.8290 per dollar. China’s yuan was stable at 7.29 per dollar in early trade.
Paraphrasing text from "Reuters" all rights reserved by the original author
